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CBS News Money Watch interview with Bob Lutz (more FUD)

Discussion in 'Tesla Motors' started by crmatson, May 16, 2016.

  1. crmatson

    crmatson Member

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    The relevant portion regarding Tesla and Musk:

    MW:
    Do you have a favorite among the cars you've been associated with, or is that like asking a dad to pick his favorite child?

    Lutz: I've been identified with a lot of successful cars, but I guess the last one in my career that was groundbreaking was the Chevrolet Volt because it was an entirely new and different technology.

    MW: Yeah, I wanted to ask you about that. You're on the record as saying the electric vehicle was inevitable, but you're not a fan of some of the models out there, particularly ones made by Tesla.

    Lutz: I'm a great fan of the vehicles. I'm certainly a great fan of the Model S. The Model X isn't working too well because it doesn't have enough roof structure, so those doors are never going to work. The Model 3 -- we'll see what happens with that. I think it's going to be delayed again.

    My argument with Tesla is the business. It's a cult stock, and I've been saying for months that the business model doesn't work. They're losing a ton of money. They're running out of cash. Their sales are sideways to down.

    MW: What would you say to someone who bought one of the pre-orders for the Model 3? Are they wasting their time?

    Lutz: I would say be prepared for far more delays than you have bought into, and secondly, be prepared to pay more than what you thought you were going to pay.

    MW: Can you foresee a time when electric cars will become as mainstream as gasoline cars?

    Lutz: The problem today is that electric cars -- because of the battery -- cost more to make. Tesla's big problem is that other producers like GM, Toyota, BMW, Volkswagen and Mercedes-Benz -- everybody is going to be producing electric vehicles at a loss, a deliberate loss to get them in the market. Tesla doesn't have that luxury. Tesla has to live off the electrics. That's going t o be very tough when everybody else is selling them at a loss.

    MW: Elon Musk recently announced plans to ramp up production of the Model 3 a lot sooner than people thought. There's a lot of skepticism about whether the plan is technologically feasible. Do you share that skepticism?

    Lutz: You know, Elon Musk is a wonderful guy. He's a visionary. He's personally charming. He's the eternal optimist. [However,] he does make a lot of claims and a lot of statements that as time goes by prove to be not to be quite accurate. Every time somebody tries to focus in on the here and now, he dangles another grand vision in front of them.

    Maverick "car guy" Bob Lutz still pulls no punches
     
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  2. CoastalCruiser

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    #2 CoastalCruiser, May 16, 2016
    Last edited: May 16, 2016
    Not necessarily seeing the FUD.

    I just met Bob for the first time watching "Revenge of the Electric Car". I guess a lot of EV types don't like him. (?)

    I thought he was an OK guy, and if you believe the way he is characterized in the documentary he is a bit of a convert.

    As an admitted noob with limited experience, I would still say he is brining up some good points in this interview.

    However, THERE IS NOTHING SO POWERFUL AS AN IDEA WHOSE TIME HAS COME. That notion, which allows for miracles, mindset transformations, luck, happenstance, winning against all odds, etc... is not necessarily being factored in to everyone's take on Tesla Motors.

    Noob out.
     
  3. crmatson

    crmatson Member

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    Tesla sales are sideways to down?!
    Quarterly sales are up about 50% from a year ago.
     
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  4. electracity

    electracity Active Member

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    Lutz is grandpa. No reason to get worked up about specific comments. I think he is a smart guy and I'm glad he is still around and talking about cars.

    The Volt may never be a great seller, but voltec is great technology and important for GM to reach upcoming fuel economy goals.
     
  5. Ryan MF

    Ryan MF Member

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    It would be quite a problem if several big manufacturers started selling EV's at a loss though doesn't seem to playing out like that. Unless he is implying that GM will have negative margins on the Bolt.
     
  6. Canuck

    Canuck Active Member

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    Yeah, just look at my "here and now". I recently drove from my home in Vancouver to my daughter's University in Kelowna, 400 km away, took her out to dinner for her 19th birthday, then drove home the same evening (another 400 km) all in one day, charging at the Supercharges in Hope and Kelowna along the way. And I recently watched Space X land a rocket on a platform in the ocean.

    I wish he'd stop dangling "grand visions" in front of me and actually prove himself!
     
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  7. djplong

    djplong Member

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    Sales are sideways or down? LIE
    The doors are never going to work? FALSE
    Business model doesn't work? Over 25% gross margin profit says you're wrong.
     
  8. Evbwcaer

    Evbwcaer Member

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    If you consider the negative externalities associated with fossil fuels, and what informed and rational person wouldn't, then fossil fueled vehicles have a higher cost total life cycle.

    EV's should never sell at a loss, all ICE's are sold with a free pass to damage ecosytems, health, climate and more.

    Get rid of the free pass, the market breakdown, the EV credits, and let's see who wins.

    We all know the answer.

    What about the X roof? I've never heard anything like what Lutz said and highly doubt it.
     
  9. Breezy

    Breezy Member

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    He thinks Elon is a visionary, he's a big fan of the Model S, says that the X has problems, and thinks the Model 3 will be delayed and cost more than many people expect.

    That's pretty mild as FUD goes.
     
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  10. Vitold

    Vitold Member

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    In areas of his expertise Lutz is quite positive on Tesla. I mean - do you really care what he thinks of stock valuation?
     
  11. Drivin

    Drivin Member

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    Were you able to do that same trip for your daughter's 17th birthday - you know when Elon said the X would originally be out? He was pointing out that Elon makes statements that aren't accurate.
     
  12. kort677

    kort677 Active Member

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    he voiced his opinions, picking them apart is fine, attacking him like some have done is a bit obnoxious. I think he is pretty much spot on, the S's are finally less problematic, the X has seen some serious issues and the 3 is at this point still like vaporware, those who plunked down deposits are in for a long, long wait.
     
  13. JohnSnowNW

    JohnSnowNW Active Member

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    [​IMG]
     
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  14. Vitold

    Vitold Member

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    The thing is even when Musk is wrong he is still right.
     
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  15. Grendal

    Grendal Active Member

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    I agree about Lutz. Also, Lutz likes to make controversial statements in the news to get attention. This is quite normal for him. Whether those statements are correct is somewhat irrelevant. Lutz is still an old GM guy and he spins things to make GM look better than it is.

    The biggest weakness for the Volt is GM. They do exactly the opposite of what Lutz implies. There is little to no support for a great car. You don't see GM pushing the advertising for its advantages and huge customer satisfaction ratings. The Chevy Corvette gets more advertising than the Volt. Also GM hasn't expanded the line. They could sell a lot of SUV's or CUV's with Voltec in them.
     
  16. Drivin

    Drivin Member

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    Exactly! If someone says the car will be out in 2014 and it comes out in 2015, then they are right even though by normal measures they were wrong. Folding seats that don't fold? He was right again! 300 mile range and a $500/month cost, he just keeps being right!
    Left is right, right is left.
    We have always been at war with Eurasia.
    Musk is still right.
     
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  17. Canuck

    Canuck Active Member

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    Who makes statements that are accurate 100% of the time? No one I know and certainly none of the most successful people.

    “If you look for perfection, you'll never be content.”
    ― Leo Tolstoy, Anna Karenina

    “I abhor the idea of a perfect world. It would bore me to tears.”
    ― Shelby Foote

    “Beauty and ingenuity beat perfection hands down, every time.”
    ― Nalo Hopkinson, Sister Mine
     
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  18. kort677

    kort677 Active Member

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    philosophy is great for dinner conversation however when I plunk down my cash I expect perfection and nothing less.
     
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  19. Canuck

    Canuck Active Member

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    Really? I've never "plunked down my cash" and expected perfection. I'm happy with "good", and "great" really pleases me -- but often in life it's "comme ci, comme ça".

    Perfection is something that if I expected when I laid down my cash, would lead me to a lot of disappointments in life. Warranty repairs would be a real bummer, but I've learned they're part of life. Perhaps that's because I don't see those quotes as "dinner conversation" but the reality of the world we live in, which is an imperfect one.

    You must be disappointed a lot when you eat at restaurants expecting perfect meals every time for plunking down your cash. Then again, that's the time you reserve for discussing philosophical issues, so perhaps then you can put it in perspective.
     
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  20. adiggs

    adiggs Active Member

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    This right here finally creates a mental model for me, for how Bob Lutz can look at the same business I'm looking at, and arrive at such a very different point of view of what's going on. I inherently dislike and distrust explanations like "he's stupid" or "he's on the payroll to say bad things about Tesla"; and I also don't believe them.

    If your mental model is that electric vehicles are cars that most everybody is building and selling at a loss because they have to build electric vehicles for various compliance reasons, then as a first order analysis, if everybody is building and selling at a loss, then clearly there's no room left for somebody else to come along and sell for a profit. Anybody that marks their car up that much will see no sales, so either they need to join in the sales-for-a-loss party, or go out of business with no sales.

    But there are a lot of assumptions packed into that first order analysis. The big one is that all electric vehicles are approximately equally functional and attractive (head and heart), and thus are reasonably substitutable for each other. Kind of like the rest of the auto industry. That's a reasonable mental model for the industry in general - the magic of Tesla is how grossly they deviate from that mental model / standard.

    At least for me, the only substitute vehicles I am considering for either replacing or augmenting my Roadster with is a Model S, X, or 3. For this consumer, the car market has 4 cars and 1 manufacturer in it - that's how far gone I am. I know I'm extreme in that point of view, but I also know that I'm not alone. I also know there are way more conversions into my point of view, than the other way around (of course, with a small subset next to a huge set, it's to be expected to see a net flow in this direction, so maybe it's not interesting - I'm investing under the belief that it is, and my retirement lifestyle will be affected by whether I'm right or not).

    More generally, I've seen enough videos and internet and in person reactions from people, to know that I'm not alone in feeling like there isn't a substitute for a Tesla today. There is only a question of whether it can be afforded or not.


    The other big unstated assumption I see, is that everybody is dealing with the same fundamental cost structure. There are some small % differences, but fundamentally, everybody has the same cost inputs and that leads to similar profit outputs. Except that Tesla doesn't have a dealer profit margin to include in the total delivered price for the customer I've seen some posts quoting the FTC about what that costs on an average car - I don't have it handy.

    More importantly, all of the hints / winks / nudges about Tesla's actual cost for an assembled battery pack has had the company consistently ahead of what anybody in the industry thing is doable in multiple years, much less what can be delivered today. At the best performance.


    Lastly, and this one is straightforward reading of financial statements, I am not convincible that Bob doesn't understand the difference between building capacity for future expanded production, and gross margin on each vehicle. It's easy for a company to simultaneously generate a profit on each unit built / sold / delivered, while losing money as a company.

    The fact that the wider Auto industry has nobody else growing at the pace Tesla is growing at, and thus nobody else dealing with the kind of capital build on such a small revenue base, doesn't excuse misreading Tesla's financials as losing money on each car.


    Really lastly - or claiming declining sales that are consistently showing ~30-50% YoY growth.


    The challenge for Bob will be getting around his paradigm of electric cars as fundamentally in competition with each other, as being largely substitutable for each other, as low function compromise cars, and seeing them as capable of being full function vehicles that aren't in need of a gas engine to make them functional. Until he makes that paradigm shift, he's not going to be able to see the market than any other terms than he used in the interview.

    Thanks for sharing - good stuff.
     
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